ANZ finalises SME business sale in PNG

Kina Bank is a wholly owned subsidiary of Kina Securities Ltd, a PNG company listed on the Australian and Port Moresby Stock Exchanges that entered into a binding sale and purchase agreement with ANZ PNG on 25 June 2018.

Kina Bank has now acquired ANZ’s retail customer deposits and loans (including credit cards); commercial/SME customer loans and deposits; ANZ PNG’s 15 retail branch premises and relevant employees; as well as 72 ATMs and more than 1,800 EFTPOS terminals (both in-branch and standalone) used by ANZ PNG.

The businesses being sold serve 85,000 retail and 6,000 commercial and SME customers and include around $150 million in lending assets and approximately $450 million in deposits.

The purchase price remains in line with that of the announcement made on 25 June 2018, a total of PGK 24.2 million (approximately $10 million), and the financial settlement is due to take place on 6 November 2019.

Commenting on the finalisation of the sale, ANZ’s managing director of institutional Australia and PNG, Graham Turley, said: “ANZ is committed to running a world-class institutional bank across our international network, in line with our strategy of simplifying our business and focusing on customers driven by trade and capital flows.

“We have been in PNG for 109 years, and we continue to see significant opportunities for business and economic growth through long-term investment and support of the resources, energy, infrastructure and agriculture sectors,” Mr Turley said.

Kina Securities Ltd CEO Greg Pawson said the acquisition is a “significant development for the group and for Kina Bank”.

“Completing the acquisition is a milestone for the company, and it represents a key component of our five-year strategic plan,” Mr Pawson said.

“It supports our objectives to deliver greater value to our customers and develop a more resilient and sustainable group. 

“It further strengthens our market position in relation, commercial and SME banking as we become the second-largest retail bank in Papua New Guinea.”

He concluded: “The acquisition also provides scale to invest in new banking capabilities and improve the value of our product offering to new and existing customers through a national network of branches, ATMs and EFTPOS terminals.”

The total capital ratio post the acquisition will be 18 per cent, according to Kina Bank.

ANZ changes to treatment of company liabilities

Meanwhile, in Australia, ANZ has announced that it will change the way it assesses serviceability for new loan applications, in which applicants hold 50 per cent or more ownership stakes in a company, effective 7 October 2019.

The big bank will now assess financial liabilities in line with the percentage of ownership an applicant has in a company, the same way it would assess company profits in a loan application.

Currently, when profits of a company and/or acceptable addbacks are utilised for servicing a loan application, ANZ expenses 100 per cent of the financial liabilities and uses 100 per cent of the acceptable addbacks. 

Going forward, the expensing of financial liabilities will be apportioned based on the applicant’s percentage shareholding, so if the loan applicant owns 70 per cent of the shares in the company, ANZ will expense 70 per cent of the company’s financial liabilities, not 100 per cent.

The above will apply to applicants who (individually or together with other applicants) hold at least 50 per cent of the shares in the company.

This policy will also apply to companies acting in their own capacity (e.g. running a business) or as trustee for a trust.

This means the current practice of applying distribution of profit based on percentage ownership in the company will now also extend to any losses and allowable addbacks (such as depreciation, interest and lease/HP charges) for companies where the 50 per cent share ownership threshold is met.

Applications submitted on or after 7 October 2019 will have the new policy applied. 

Applications currently in AST/AIP, which require critical changes after the effective date will have the new policy applied. 

Declined applications or applications that have expired and are re-submitted on or after the effective date will have the new policy applied.

[Related: Asset finance lender acquired for $260m]